Threat of New Entrants :
Industry seems to have very high potential but is at its nascent stage. Lots of scope of growth in the future
Many small players might enter to explore the market
High capital investment is required as it is still in the nascent stage. Would not be much of a deterrent as venture capitalists are interested in investing, as they see a future in it.
Flipkart is already an established its brand name and network across the nation. Hence, it may not be affected by the entry of small players in its market domain
Flipkart is slowly moving up. Although, other players are learning from Flipkart’s mistakes and trying to do better. Since the industry is emerging profits cannot be achieved. Determinants of Supplier Power :
For Suppliers (product manufacturers), e-commerce is another platform to sell their products, without any differentiation Hence, e-commerce companies have little amount of bargaining power, including Filpkart.
There is an exception in case of popular products, as company has lot of alternatives. Their switching cost is low, if there is no contact.
Not all suppliers may have the ability of willingness to forward integrate, as it is highly risky market.
Price discrimination is very much possible.
As Flipkart is an inventory- based business model, they buy in bulk from their suppliers.
Treating suppliers as partners would be very beneficial for Flipkart and it’s suppliers.
Rivalry amongst existing firms :
Flipkart is having a hard time as it is competing with it’s competitors in e-commerce as well as retail stores.
Flipkart has less competitors of the same size, but many in smaller size.
Flipkart has lot of competitors now , but not as huge as them, small in size but large in number.
Incentive to fight is low, as the market is big enough for everyone to grow but there is no profit margin.
Exit costs are very high, as Flipkart has an Inventory – based business model.